Wyandanch UFSD Overstates Fund Balance Deficit by $1.2M

Will Likely End 2009-10 School Year with No Accumulated Deficit

Wyandanch Union Free School District (district) overstated its general fund balance deficit by $1.2 million and knowingly overstated its state aid revenue estimates by $4 million, according to an audit released today by State Comptroller Thomas P. DiNapoli. However, based on revised calculations done by DiNapoli's office, the district will likely end the 2009-10 school year with no accumulated deficit.

"The district is actually in better financial shape than widely believed," DiNapoli said. "We found several instances where the district did not calculate short and long-term liabilities properly. Wyandanch is not out of the woods, but it's not in as bleak a fiscal position as many had feared. Conversely, we also found that the district did not adopt budgets with accurate revenue estimates, at times overstating state aid by millions of dollars."

The audit, covering July 2008 to June 2010, found the district failed to accurately calculate compensated absences such as vacation leave, sick leave or personal leave. In 2009, the district's fund balance deficit should have totaled approximately $528,000 instead of the reported $1.76 million, a difference of $1.2 million.

Only the current portion of compensated absences liability should be reported on the balance sheet of governmental funds. The district incorrectly reported its long-term liability as a short-term liability on its balance sheets by including all employees eligible to retire, rather than only those employees that planned to retire in the next 12 months.

In addition, the district's calculation of its long-term compensated absence liability incorrectly included retirement incentives and did not include the employer portion of Social Security and Medicare taxes. For the fiscal year that ended June 30, 2009, the district's long-term compensated absence liability was reported as $1.86 million, but should have been $1.24 million, a difference of more than $600,000.

DiNapoli's audit also found district officials knowingly overestimated the amount of state aid the district would receive by $2.5 million in 2007-08 and $1.5 million in 2008-09. In these years, the superintendent indicated they would meet with state officials and the state education department to lobby for more state aid, which did not materialize. With a new superintendent in place, however, the Board made spending cuts and ended 2008-09 with a $1.2 million operating surplus.

The audit recommends that the district needs to adopt realistic budgets based on reliable data, such as historical costs and available contract and state aid information, and regularly monitor those actual results throughout the year.

Auditors also found over the past several years, the school lunch fund has sustained a deficit fund balance. From July 1, 2008 through June 30, 2010, district officials prepared only a budget for estimated expenditures, but not for estimated revenues. The district did not receive enough revenues to meet their current expenditures. The general fund did not always subsidize the school lunch fund. As a result, this contributed to the school lunch fund's increasing deficit. The fund has an unreserved fund deficit of $500,000 as of June 30, 2009, approximately half the size of its budget.

The district accepted the three recommendations contained in the report.